1. Field of the Invention
The present invention relates to devices for the prevention of credit card fraud.
2. Description of Related Art
It is well known that credit card fraud is a major problem in the credit card industry. Such fraud is achieved in many ways, one method being the theft of a cardholder's wallet or purse and the subsequent unauthorized usage of the credit cards and debit cards stored therein. Often, stolen credit cards are used within the first few hours of the theft. Most credit card fraud is detected before the cardholder knows there is a problem. Adding to this problem is the fact that most cardholders carry more than one credit card. Often, the cardholder does not even know how many or which cards he is carrying, and most cardholders do not keep a separate list of all of their credit and debit cards. Credit card companies often end up paying for the majority of unauthorized usage. This reduces the credit card companies' profits and leads to increased fees for cardholders.
Because cardholders often carry more than one credit or debit card, even if one credit card company notices irregular purchases on the credit card and restricts the use of that particular credit or debit card, the fraud continues because the thief simply switches to another credit card in the wallet or purse. Because the cards are usually issued by different companies, it is unlikely that the fraudulent use of one card will be reported to the issuing companies of the other cards. Thus, even if the theft is noticed by the cardholder, it is very difficult and time consuming to contact every financial institution that has issued a credit or debit card to the cardholder.
These methods of restricting the use of credit cards are not without their problems. Computerized monitoring systems occasionally restrict the valid use of a credit card merely when the cardholder's purchasing habits change. For instance, it is possible for a generally frugal shopper to have their credit card locked by the issuing company when the cardholder goes on an unusual shopping spree or travels to an unusual location. The prospect of angering customers by such mistakes makes automated monitoring an undesirable alternative of fraud protection for most credit card companies.
One proposed solution is for the cardholder to register all of his credit, debit, and other financial institution cards under a single credit card fraud protection plan. This allows the plan administrator to contact the credit card issuers in the event a fraud or theft is reported to the plan administrator by the cardholder. Although such credit card fraud protection plans offer a valuable service to the cardholder, it is still incumbent upon the cardholder to realize that a theft or fraud has taken place and to notify the plan administrator. Unfortunately, the theft is usually not realized until several hours or days have passed. This is true for many different reasons, including: the theft occurs while the cardholder is sleeping; the cards are stolen from the cardholders home while the cardholder is away or out of town; the thief only steals the cards, and not the entire wallet or purse; the cards are not actually stolen, but the numbers, expiration dates, and code numbers are copied for use over the phone or the Internet; and a wide variety of other reasons.
Therefore, although there have been significant developments in the area of credit card fraud prevention, considerable shortcomings remain.